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Brazil: BM&FBOVESPA – News September 2011 – Nr.20

Launch of the first stage of the BM&FBOVESPA PUMATrading System

BM&FBOVESPA announces the conclusion of the first stage of development and integrated tests with the market of its new trading platform, named the BM&FBOVESPA PUMA Trading System. This is a multi-asset electronic trading platform that has been developed by BM&FBOVESPA and CME Group. BM&FBOVESPA PUMA Trading System will replace the Global Trading System (GTS), Mega Bolsa, BOVESPA FIX and SISBEX, integrating them into a single system with greater processing capacity, extremely low latency, and new functions. The implementation will occur in stages:

  • 1st Stage: Substitution of GTS (derivatives and spot foreign exchange);
  • 2nd Stage: Substitution of Mega Bolsa (equities and equity derivatives);
  • 3rd Stage: Substitution of BOVESPA FIX (fixed-income corporate securities) and SISBEX (government securities).

The Exchange implemented the BM&FBOVESPA PUMA Trading System in the spot foreign exchange market on August 29, 2011. The other stages will be executed in the following weeks, at dates to be announced at an opportune moment. As part of the GTS replacement effort, instruments will migratein four-stages. At each stage, orders sent to the Exchange for these contracts will be processed exclusively by the new system. The migration stages are:

  • 1st Migration: Spot foreign exchange contracts.
  • 2nd Migration: Agricultural derivatives.
  • 3rd Migration: Financial derivatives (interest rates, foreign exchange, inflation indices, gold etc.), except for derivatives based on stock indices.
  • 4th Migration: Derivatives based on stock indices.

Automated solution for market surveillance, operation and market oversight

BM&FBOVESPA and BOVESPA Market Supervision (BSM), the Brazilian self-regulatory organization in charge of inspecting and supervising transactions and trade authorizations, announced on September 15 that they will use NASDAQ OMX’s SMARTS Integrity market surveillance platform to monitor trading across their equities and commodities platforms. Using SMARTS Integrity, BM&FBOVESPA and BSM will have a comprehensive portfolio of alert scenarios for market behavior.

> More information

BM&FBOVESPA and BNDES present new portfolio for the Carbon Efficient Index

BM&FBOVESPA and BNDES announced on September 5 the composition of the theoretical portfolio of the Carbon Efficient Index, valid from September to December 2011. The ICO2 is an index composed of stocks in IBrX-50 index companies that have accepted involvement in the initiative, adopting transparent practices as regards greenhouse gas emissions (GGEs). The calculation of shares in the ICO2 index takes into consideration the greenhouse gas emissions and free float of companies.

The portfolio valid as of today can be viewed here.

New head of BM&FBOVESPA for UK

BM&FBOVESPA announces that Sergio Gullo has been hired as the new chief representative for BM&FBOVESPA in London. He will report to BM&FBOVESPA International Business Development Officer Lucy Pamboukdjian and be responsible for operations with the European, Middle Eastern and African markets. Sergio Gullo has been active in the financial market for more than 27 years. He was Business Development Manager in the United Kingdom for BGC Partners and has worked in financial institutions such as Banco Votorantim and Renaissance Capital, specializing in emerging markets and always in commercial areas with a focus on fixed income and structured products. He also held a wide range of positions at Lloyd’s TSB Bank for 19 years, in both Brazil and the UK.

New office in London

The BM&FBOVESPA office in London has moved to One New Change, 4th floor (London, EC4M, 9AF, United Kingdom). The London office may be contacted by e-mail at sgullo@bvmf.com.br and by telephone at (+44) 203 379 3978.

BM&FBOVESPA and Shenzhen Stock Exchange Sign Memorandum of Understanding

BM&FBOVESPA (BVMF) and the Shenzhen Stock Exchange (SZSE) signed on September 26 a memorandum of understanding (MOU) which includes personnel exchange, mutual training and information and experience sharing. Ms Song Liping, President of the Shenzhen Stock Exchange, and Mr. Edemir Pinto, CEO of BM&FBOVESPA, signed the MOU last month during the 5th International, Financial and Capital Market Conference in Campos do Jordão, in the state of São Paulo.

BM&FBOVESPA’s options and capital raising activity

According to the WFE (World Federation of Exchanges), BM&FBOVESPA is ranked as #1 in volume of Stock Options contracts trades and #4 in IPOs (Capital Raised). These and other regulated exchange industry numbers are available at: http://www.world-exchanges.org/statistics

Securities Lending

In August, the total number of securities lending transactions reached a record 141,721 compared to the previous record of 121,971 in May 2011 and to 114,989 in July. Financial volume was BRL 62.63 billion in August from BRL 52.16 billion the previous month.

Ibovespa and other index portfolios, valid for September-December 2011

BM&FBOVESPA has announced the Ibovespa theoretical index portfolio, which will be valid from September 5 to December 29, 2011, based on the closing of the September 2, 2011 trading session. The new portfolio now includes common shares in BR Malls and Cia Hering, which brings its total to 68 stocks in 63 companies.

> More information

BM&FBOVESPA launches app for Google Chrome web browser

BM&FBOVESPA announced on September, 16th that users of the Google Chrome web browser can download a free app that allows real time monitoring of the share prices of companies traded on BM&FBOVESPA and of the directions taken by the main capital market indexes. This tool allows users to customize their share portfolio, storing in the “Favorites” tab the companies that they wish to monitor daily. The app includes films that explain stock investment, wealth creation, and financial education. It also contains messages that are sent to the BM&FBOVESPA twitter channel @Info_BMFBOVESPA

To obtain the BM&FBOVESPA Google Chrome app, please access the Google Web Store and download the file at: https://chrome.google.com/webstore.

2011 EVENTS

Family Office Summit – Latin America

BM&FBOVESPA is currently sending invitations for this event promoted by the World Research Group and which will be held in São Paulo September 26-28. A BM&FBOVESPA representative is scheduled to talk about alternative investments. The summit will present current trends for optimizing effective strategies and alternative methods to produce investments for single and multi family offices in the Brazilian capital market. There will be a special networking session bringing together managers, single and multi family offices, advisors and consultants.

Location: Intercontinental São Paulo – Alameda Santos, 1123, São Paulo , SP.
Date: September 26-28, 2011.

> Full Agenda and Registration

2nd FX Growth Markets Series: Brazil – Profit & Loss

BM&FBOVESPA will join the Profit & Loss FX Growth Markets conference on October 20, 2011 at the Tivoli Hotel in São Paulo. Profit & Loss has been operating its highly successful series of Forex Network and FX Growth Markets conferences for more than 10 years, with regular annual events held in London, New York, Chicago, Singapore, Brazil, Mexico, Colombia, Chile, Shanghai and Toronto, and comes to Brazil for the second time. A BM&FBOVESPA representative will talk at the event.

Location: Tivoli Hotel São Paulo, São Paulo, Brazil
Date: October 20, 2011.

> Full Agenda

BM&FBOVESPA at Chicago’s FIA EXPO

BM&FBOVESPA will exhibit at FIA EXPO 2011. The event attracts approximately 5,000 people from more than 30 countries, from senior staff at brokerage firms and exchanges to floor traders, pension fund managers, corporate treasurers, CTAs and CPOs, and individual investors. BM&FBOVESPA staff will present the Exchange’s products, connectivity, DMA access via Globlex, co-location and others.

Location: Hilton Chicago, USA
Date: October 10-12, 2011

> More info

The World Cup of ETFs and Indexing Latin America

BM&FBOVESPA is lending its support to the World Research Group’s “World Cup of ETFs and Indexing Latin America.” The event aims at providing attendees with the best practices for ETFs use, as well as a comprehensive analysis of market structure, regulations and current and future opportunities. The expected audience includes pension funds, hedge fund managers and investors, investment advisors, financial consultants, and other market participants. A BM&FBOVESPA representative will talk about the Exchange’s ETF products.

Location: São Paulo (TBC)
Date: October 17-18, 2011.

> Full Agenda and Registration

Volumes and trades by Direct Market Access (DMA)

BM&F Segment
In August, BM&F* market segment transactions carried out through order routing via Direct Market Access (DMA) registered 41,417,494 contracts traded and 4,431,750 trades. In July, the volume reached 20,009,841 contracts traded and 2,417,398 trades.

The volumes registered by each access modality in the BM&F segment were as follows:

  • Traditional DMA – 17,540,231 contracts traded, in 1,306,241 trades, in comparison to 7,440,774 contracts and 797,002 trades in July;
  • Via DMA provider (including orders routed via the Globex System) – 14,088,756 contracts traded, in 435,281 trades, compared to 7,040,432 contracts and 258,881 trades in July;
  • DMA via direct connection – 4,210 contracts traded in 830 trades, against 3,691 contracts and 977 trades in July;
  • DMA via co-location – 9,784,297 contracts traded, in 2,689,398 trades, compared to 5,524,944 contracts and 1,360,538 trades in July.

In August, transactions carried out by foreign investors presented by CME to BVMF (who use the Globex-GTS order routing system or access BVMF markets via co-location) totaled 5,308,308 contracts traded, in 1,235,349 trades, compared to 2,897,744 contracts and 688,862 trades in July.

BOVESPA Segment
In August, order routing via DMA in the BOVESPA* segment totaled BRL 138,522,096,000.00 and 17,021,408 trades, from BRL 95,030,778,000.00 and 11,225,193 trades the previous month.

Trading volumes per type of DMA in the BOVESPA segment:

  • Traditional DMA – Volume of BRL 120,451,427,000.00 and 14,098,638 trades from BRL 87,674,861,000.00 and 10,091,956 in July;
  • DMA via co-location – Volume of BRL 16,691,370,000.00 and 2,755,498 trades from BRL 6,381,361,000.00 and 1,007,081 in July;
  • DMA via provider – Volume of BRL 1,379,299,000.00 and 167,272 trades from BRL 974,556,000.00 and 126,156 in July.

* Direct access to the BM&FBOVESPA market segments is carried out through DMA models 1, 2, 3 and 4. In model 1 or traditional DMA, the client accesses the GTS or Mega Bolsa through technological intermediation of a brokerage house. In model 2 or via DMA provider, the client does not use the technological intermediation of a brokerage house, but rather connects to the system through an authorized access provider. DMA via order routing with CME Globex is also a form of DMA model 2. In model 3, the client connects to the system through a direct connection. In model 4 or via co-location, the client installs its own computer within the Exchange’s facilities.

Notes:

The volumes registered by access modality include both buy and sell sides of a trade.

The volumes by access modality for both the BM&F and the BOVESPA market segments have been reported in a consolidated manner in the BM&FBOVESPA statements since May 2009.

MARKET RESULTS

BM&F Segment August 2011

Derivatives markets in the BM&F segment (including financial and commodities derivatives) totaled 78,606,873 contracts and BRL 5.23 trillion in volume in August, compared to 44,199,125 contracts and BRL 3.35 trillion in July. The daily average of contracts traded in the derivatives markets in August was 3,417,690, in contrast to 2,104,720 in July. Open interest contracts ended the last trading day of August with 37,821,302 positions, compared to 30,716,596 in July.

BOVESPA Segment August 2011

In August 2011, the equity markets (BOVESPA segment) financial volume totaled a record BRL 177.906 billion, in a record 16,234,673 trades, with daily averages of BRL 7.73 billion and a record 705,855 trades. This was in comparison to the prior total volume record of BRL 155.55 billion in October 2010, the prior total trades record of 11,172,707 in May 2011 and the prior daily average trades record of 544,88 in February 2011.

Source:BM&FBOVESPA, 20.09.2011

Filed under: BM&FBOVESPA, Brazil, FIX Connectivity, News, Trading Technology, , , , , , , , , , , , , , , , , , , , ,

Brazil: BM&FBOVESPA News August 2011 Nr 29

BM&FBOVESPA International Financial and Capital Markets Conference features Robert Skidelsky and Michael Pettis

The biennial meeting held as of Thursday (August 25) in the town of Campos do Jordão in the state of São Paulo will host debates on current economic and global financial market issues, including challenges for the derivatives and capital markets, the future of financial intermediation, and algorithmic trading strategies. BM&FBOVESPA Chief Executive Officer Edemir Pinto and Chairman of the Board of Directors Arminio Fraga will receive, for lectures and debates, some of the world’s most influential experts about the matters on the agenda. Among their number are Robert Skidelsky, Emeritus Professor of Political Economy at the University of Warwick, and a specialist on the work of the economist John Maynard Keynes. Michael Pettis, a professor at Peking University’s Guanghua School of Management and expert on the Asian markets will take part in a discussion about the challenges that the Brazil-China relationship will face over the coming years.

> Full agenda of the event

BM&FBOVESPA launches eight new currency derivatives

BM&FBOVESPA launched eight new currency futures contracts this week (August, 15). They are six futures contracts and two mini futures contracts. The regular futures contracts are for the Brazilian Real against the South African Rand (ZAR), Turkish Lira (TRY), New Zealand Dollar (NZD), Chilean Peso (CLP), Chinese Yuan (CNY) and Swiss Franc (CHF). The contracts will be authorized for trading as of the September 2011 maturity, between 9:00 a.m. and 6:00 p.m. Each futures contract is sized and formatted so that it is equivalent to the USD 50,000 size of U.S. Dollar futures contract. The sizes of the respective contracts are 350,000 South African Rands; 350,000 Chinese Yuan; 75,000 Turkish Lira; 75,000 New Zealand Dollars; 50,000 Swiss Francs; and 25 million Chilean Pesos. The Mini U.S. Dollar Futures Contract (WDO) is sized USD 10,000, which represents 20% of the size of the regular U.S. Dollar Futures Contract. The Mini Euro Futures Contract (WEU) is sized €10,000, representing 20% of the size of the regular Euro Futures Contract .

> More info

International partnerships mark the expansion of the BM&FBOVESPA Institute of Education

The BM&FBOVESPA Institute of Education has been known as the “Escola para os Mercados Financeiro, de Capitais e de Derivativos” (Financial, Capital and Derivatives Markets School) since its foundation in 1986. Growing demand for professional training, however, means it has broadened its scope since 2010 and it has also begun operating as the “Escola do Investidor” (School of the Investor) and the “Escola de Empresas e Empreendedores” (Enterprises and Entrepreneurs’ School). In the first half of 2011 the Institute of Education signed cooperation agreements with internationally renowned business schools, among which the Endeavor Institute, Babson College and Chicago Booth:

  • Endeavor Institute – the “Bota pra fazer” (Sow to Reap) program of courses aimed at startup companies, in business incubators. This methodology was developed by Endeavor Brazil in partnership with the Kauffman Foundation. The Institute of Education was the first institution in Brazil to apply this methodology for qualifying entrepreneurs.
  • Babson College – Through this partnership, the BM&FBOVESPA Institute of Education offers the “Gestão e Crescimento Empresarial de Alto Impacto” (High Impact Business Management and Growth) program of courses, hand-tailored to enable Brazilian entrepreneurs to lead their companies’ growth. The second group begins in October this year.
  • Chicago Booth – The business school of the University of Chicago. This partnership has resulted in the development of a three-module academic program, focused on the capital and derivatives markets and with an international approach.  Next course in December.

BM&FBOVESPA’s options and capital raising activity

According to the World Federation of Exchanges (WFE) BM&FBOVESPA is ranked as #1 in volume of Equity Option trades and #4 (Capital Raised) in terms of newly listed companies (IPOs). These and other regulated exchange industry numbers are available at:
http://www.world-exchanges.org/statistics

Market Makers for Options on the Stock of BM&FBOVESPA, Usiminas and BOVESPA Index

BM&FBOVESPA announced on August 3 the start of the selection process for up to three market makers for options on the stock of BM&FBOVESPA S.A (BVMF3) and Usinas Siderúrgicas de Minas Gerais S.A. – Usiminas (USIM5) and for options on the BOVESPA Index (IBOV). This is the second stage of the Bidding Program to select market makers in equity options and BOVESPA Index options, developed by the Exchange. Institutions that are interested in taking part – including nonresidents – have until September 26, 2011 to deliver proposals. The winners will be announced on October 11, 2011.

> More information about the Market Makers for Options

Bradesco wins BM&FBOVESPA selection process as Depositary Institution for 10 Unsponsored Level I BDR Programs

Bradesco has won the sixth selection process for depositary institutions authorized to request registration for trading 10 Unsponsored Level I Brazilian Depository Receipt (BDR) programs, backed by shares issued by publicly traded companies with headquarters overseas. Bradesco should simultaneously present BM&FBOVESPA and the Brazilian Securities and Exchange Commission (CVM), within 60 calendar days, with the necessary documentation for submission to register the 10 Unsponsored Level 1 BDR programs. The programs should include foreign companies that do not yet have BDRs traded on BM&FBOVESPA and which are headquartered in the United States and listed on U.S. stock exchanges.

There are currently 30 Unsponsored Level 1 BDR programs available for trading on BM&FBOVESPA, which have Deutsche Bank S.A., Citibank DTVM S.A. and Itaú Unibanco S.A. as their depositary institutions. Another three lots of ten programs shall be presented to the market soon by Banco Bradesco S.A., Citibank DTVM S.A. and Deutsche Bank S.A.

> More info

Up to USD 10 billion in public offerings and follow-ons in 2011

In the year to August 15, BM&FBOVESPA registered USD 10.1 billion in public offerings and follow-ons. There were eleven Initial Public Offerings (IPOs) in 2011: AREZZO&CO (ARZZ3), SIERRA BRASIL (SSBR3), AUTOMETAL (AUTM3), QGEP PART (QGEP3), IMC HOLDING (IMCH3), TIME FOR FUN (SHOW3), MAGAZINE LUIZA (MGLU3), BR PHARMA (BPHA3), QUALICORP (QUAL3), TECHNOS (TECN3) and ABRIL EDUCAÇÃO (ABRE11). At the end of July, the 181 companies that are part of the BM&FBOVESPA’s special corporate governance levels represented 64.96% of market capitalization, 79.04% of financial volume, and 76.84% of trades in the spot market. At the end of June, there were 177 companies, representing 65.56% of market capitalization, 75.42% of financial volume, and 77.57% of spot market trades.

Number of ETF trades grows 25% from June

The financial volume registered in July by the eight BM&FBOVESPA Exchange-Traded Funds (ETFs) reached BRL 667.75 million in 31,997 trades, from BRL 598.43 million and 25,701 the previous month. In July the ETF with the highest financial volume was BOVA11 with BRL 573.83 million and 26,915 transactions.

2011 EVENTS

BM&FBOVESPA 5th International Financial and Capital Markets Conference

The city of Campos do Jordão will once again be the site of one of the year’s most important financial market events, hosted by BM&FBOVESPA. The 5th edition of the International Financial and Capital Markets Conference will have national and international guest speakers, round-table discussions, social activities and an exhibition area providing an excellent venue for participants to debate some of the most significant financial topics. Speakers include: Maria Helena Santana (Securities and Exchanges Commission of Brazil – CVM), Robert Engle (2003 Nobel Prize), Joe Gawronski (COO of Rosenblatt Securities) and Ilan Goldfajn (Chief Economist, Itau Unibanco).

Location: Campos do Jordão, SP, Brazil
Date: August 25-27, 2011

> Full agenda of the event

*Nonresident investors can apply for an exclusive 50% discount for registration at the event. Please contact the International Business Development team to request your coupon, by email to ysilva@bvmf.com.br or drodrigues@bvmf.com.br

BM&FBOVESPA at Chicago’s FIA EXPO

BM&FBOVESPA will exhibit at FIA EXPO 2011. The event attracts approximately 5,000 people from more than 30 countries, from senior staff at brokerage firms and exchanges, to floor traders, pension fund managers, corporate treasurers, CTAs and CPOs, and individual investors. BM&FBOVESPA staff will present the Exchange’s products, connectivity, DMA access via Globlex, etc.

Location: Hilton Chicago, USA
Date: October 10-12, 2011

> More info

Family Office Summit – Latin America

BM&FBOVESPA is currently sending invitations for this event promoted by the World Research Group and which will be held in São Paulo September 26-28. A BM&FBOVESPA representative is scheduled to talk about alternative investments. The summit will present current Trends for Optimizing Effective Strategies and Alternative Methods to Produce Investments for Single and Multi Family Offices in the Brazilian capital market. There will be a special networking session bringing together managers, single and multi family offices, advisors and consultants.

Location: Intercontinental São Paulo – Alameda Santos, 1123, São Paulo , SP.
Date: September 26-28, 2011.

> Full Agenda and Registration

2nd FX Growth Markets Series: Brazil – Profit & Loss

BM&FBOVESPA will join the Profit & Loss FX Growth Markets conference on October 20, 2011 at the Tivoli Hotel in São Paulo. Profit & Loss has been operating its highly successful series of Forex Network and FX Growth Markets conferences for more than 10 years, with regular annual events held in London, New York, Chicago, Singapore, Brazil, Mexico, Colombia, Chile, Shanghai and Toronto, and comes to Brazil for the second time. A BM&FBOVESPA representative will talk at the event.

Location: Tivoli Hotel São Paulo, São Paulo, Brazil
Date: October 20, 2011.

> Full Agenda

Volumes and trades by Direct Market Access (DMA)

BM&F Segment
In July, BM&F* market segment transactions carried out through order routing via Direct Market Access (DMA) registered 20,009,841 contracts traded and 2,417,398 trades. In June, the volume reached 20,409,252 contracts traded and 2,105,981 trades.

The volumes registered by each access modality in the BM&F segment were as follows:

  • Traditional DMA – 7,440,774 contracts traded, in 797,002 trades, in comparison to 8,168,492 contracts and 775,388 trades in June;
  • Via DMA provider (including orders routed via the Globex System) – 7,040,432 contracts traded, in 258,881 trades, compared to 7,365,306 contracts and 260,441 trades in June;
  • DMA via direct connection – 3,691 contracts traded in 977 trades, against 8,995 contracts and 1,376 trades in June;
  • DMA via co-location – 5,524,944 contracts traded, in 1,360,538 trades, compared to 4,866,459 contracts and 1,068,766 trades in June.

In July, transactions carried out by foreign investors presented by CME to BVMF (who use the Globex-GTS order routing system or access BVMF markets via co-location) totaled 2,897,744 contracts traded, in 688,862 trades, compared to 2,658,361 contracts and 623,653 trades in June.

BOVESPA Segment
In July, order routing via DMA in the BOVESPA* segment totaled BRL 95,030,778,000.00 and 11,225,193 trades, from BRL 88,977,494,000.00 and 10,244,578 trades the previous month.

Trading volumes per type of DMA in the BOVESPA segment:

  • Traditional DMA – Volume of BRL 87,674,861,000.00 and 10,091,956 trades from BRL 82,843,187,000.00 and 9,287,652 in June;
  • DMA via co-location – Volume of BRL 6,381,361,000.00 and 1,007,081 trades from BRL 5,206,388,000.00 and 856,246 in June;
  • DMA via provider – Volume of BRL 974,556,000.00 and 126,156 trades from BRL 927,919,000.00 and 100,680 in June.

* Direct access to the BM&FBOVESPA market segments is carried out through DMA models 1, 2, 3 and 4. In model 1 or traditional DMA, the client accesses the GTS or Mega Bolsa through technological intermediation of a brokerage house. In model 2 or via DMA provider, the client does not use the technological intermediation of a brokerage house, but rather connects to the system through an authorized access provider. DMA via order routing with CME Globex is also a form of DMA model 2. In model 3, the client connects to the system through a direct connection. In model 4 or via co-location, the client installs its own computer within the Exchange’s facilities. 

Notes:

The volumes registered by access modality include both buy and sell sides of a trade.

The volumes by access modality for both the BM&F and the BOVESPA market segments have been reported in a consolidated manner in the BM&FBOVESPA statements since May 2009.

MARKET RESULTS

BM&F Segment July 2011

In July, derivatives markets in the BM&F segment (including financial and commodities derivatives) totaled 44,199,125 contracts and BRL 3.35 trillion in volume, compared to 51,023,956 contracts and BRL 3.25 trillion in June. The daily average of contracts traded in the derivatives markets in July was 2,104,720, in contrast to 2,429,712 in June.

BOVESPA Segment July 2011

In July 2011, equity markets (BOVESPA segment) traded BRL 119.63 billion, in 11,016,993 trades, with daily averages of BRL 5.69 billion and 524,619 trades, in comparison to June when total volume reached BRL 124.19 billion, in 10,187,883 trades, with daily averages of BRL 5.91 billion and 485,137 trades.

Filed under: BM&FBOVESPA, Brazil, China, Events, Exchanges, News, Risk Management, Trading Technology, , , , , , , , , , , , , , , , , , , , ,

ETF Industry Highlights – April 2011 – BlackRock

Global ETF and ETP industry:

Record April net inflows with US$25.3 Bn.

Record YTD net inflows in the first four months with US$67.2 Bn through the end of April 2011.

The global ETF industry had 2,670 ETFs with 6,021 listings and assets of US$1,469.8 Bn, from 140 providers on 48 exchanges around the world at the end of April 2011. This compares to 2,189 ETFs with 4,354 listings and assets of US$1,113.1 Bn from 122 providers on 42 exchanges, at the end of April 2010.

The global ETF and ETP industry combined, had 3,819 products with 7,893 listings, assets of US$1,670.9 Bn from 176 providers on 52 exchanges around the world. This compares to 2,967 products with 5,453 listings, assets of US$1,295.1 Bn from 150 providers on 44 exchanges, at the end of April 2010.

United States ETF and ETP industry:

Record April net inflows with US$22.4 Bn.
Record YTD net inflows in the first four months with US$51.5 Bn through the end of April 2011.
The ETF industry in the United States had 972 ETFs and assets of US$997.3 Bn, from 29 providers on two exchanges at the end of April 2011. This compares to 839 ETFs and assets of US$764.0 Bn, from 28 providers on two exchanges at the end of April 2010.
US$22.4 Bn of net new assets went into United States listed ETFs/ETPs in April 2011. US$16.7 Bn net inflows went into equity ETFs/ETPs, of which US$9.8 Bn went into ETFs/ETPs tracking US equity indices and US$3.5 Bn went into ETFs/ETPs tracking emerging markets equity indices. Fixed income ETFs/ETPs saw net inflows of US$2.9 Bn, of which US$0.7 Bn went into corporate bond ETFs/ETPs and US$0.6 Bn went into Government bond ETFs/ETPs. Commodity ETFs/ETPs saw net inflows of US$1.8 Bn, of which US$2.4 Bn went into ETFs/ETPs providing exposure to precious metals, while ETFs/ETPs providing exposure to energy experienced US$0.9 Bn net outflows in April 2011.
Of the US$45.5 Bn of net new assets in United States listed ETFs in April 2011, Vanguard gathered the largest net inflows with US$13.2 Bn, followed by iShares with US$12.7 Bn net inflows, while Bank of New York had the largest net outflows with US$1.4 Bn in 2011 YTD.

European ETF and ETP industry:

The European ETF industry had 1,128 ETFs with 3,952 listings and assets of US$328.2 Bn, from 39 providers on 23 exchanges at the end of April 2011. This compares to 932 ETFs with 2,748 listings and assets of US$234.3 Bn from 36 providers on 18 exchanges, at the end of April 2010.
US$3.6 Bn of net new assets went into European listed ETFs/ETPs in April 2011. US$2.8 Bn net inflows went into equity ETFs/ETPs, of which US$1.6 Bn went into ETFs/ETPs providing emerging markets exposure while ETFs/ETPs providing broad European exposure saw net outflows of US$1.2 Bn. Fixed income ETFs/ETPs saw net outflows of US$0.4 Bn, of which money market ETFs/ETPs experienced US$0.3 Bn net outflows while high yield ETFs/ETPs saw net inflows of US$0.2 Bn. US$1.1 Bn net inflows went into commodity ETFs/ETPs, of which US$0.5 Bn went into ETFs/ETPs providing exposure to precious metals and US$0.4 Bn went into ETFs/ETPs providing broad commodity exposure.
Of the US$2.8 Bn of net new assets in European listed ETFs in April 2011, Source Markets gathered the largest net inflows with US$0.9 Bn, followed by db x-trackers with US$0.6 Bn net inflows, while iShares and Lyxor Asset Management had the largest net outflows with US$0.2 Bn.


Asia Pacific (ex-Japan) ETF industry:

The Asia Pacific (ex-Japan) ETF industry had 250 ETFs with 362 listings and assets of US$58.6 Bn, from 63 providers on 13 exchanges at the end of April 2011. This compares to 168 ETFs with 267 listings and assets of US$44.4 Bn, from 53 providers on 13 exchanges, at the end of April 2010.


Japan ETF industry:

The Japanese ETF industry had 84 ETFs with 88 listings and assets of US$29.4 Bn, from seven providers on three exchanges at the end of April 2011. This compares to 70 ETFs with 73 listings and assets of US$26.3 Bn from six providers on two exchanges, at the end of April 2010. There are 178 ETFs which have filed notifications in Japan.


Latin America ETF industry:

The Latin American ETF industry had 27 ETFs, with 407 listings and assets of US$10.4 Bn, from four providers on three exchanges at the end of April 2011. This compares to 21 ETFs, with 243 listings and assets of US$9.1 Bn from three providers on three exchanges, at the end of April 2010.


Canada ETF industry:

The Canadian ETF industry had 180 ETFs and assets of US$43.1 Bn, from four providers on one exchange at the end of April 2011. This compares to 134 ETFs and assets of US$33.0 Bn from four providers on one exchange, at the end of April 2010.

Source: BlackRock, Carral, May 2011

Filed under: Asia, Latin America, News, , , , , , , , , , ,

ETF Landscape: Industry Review – Q1 2011 – BlackRock

At the end of Q1 2011, the global ETF industry had 2,605 ETFs with 5,905 listings and assets of US$1,399.4 Bn  from 142 providers on 48 exchanges around the world. This compared to 2,131 ETFs with 4,133 listings and assets of  US$1,081.9 Bn from 123 providers on 42 exchanges at the end of Q1 2010.  ETF Industry Review_Q1-2011

Additionally, there were 1,119 other ETPs with 1,835 listings and assets of US$183.7 Bn from 58 providers on 23 exchanges. This compared to 718 ETPs with 1,025 listings and assets of US$153.6 Bn from 42 providers on 18 exchanges at the end of Q1 2010.

Combined, there were 3,724 products with 7,740 listings, assets of US$1,583.2 Bn from 178 providers on 52 exchanges around the world at the end of Q1 2011. This compared to 2,849 products with 5,158 listings, assets of US$1,235.4 Bn from 147 providers on 44 exchanges at the end of Q1 2010.

Below is a list of some upcoming events where we will be presenting:

Asia Trader and Investor Convention 2011, Singapore 07-08 May 2011
Complimentary passes are available
www.theatic.net

2nd Annual Inside ETFs – Europe Conference, Amsterdam, 05–06 May 2011
Complimentary passes are available for institutional investors.
www.indexuniverse.eu

Turkey Investment Summit, Istanbul, 09–11 May 2011
www.terrapinn.com

iShares Investment Konferenz, Frankfurt, 11 May 2011
www.ishares-events.com

22nd Annual Conference on Globalisation of Investment Funds, Boston,
15–18 May 2011
www.int-bar.org

ETF & Indexing Investments, New York, 16–18 May 2011
www.terrapinn.com

Factset Investment Process Symposium, Monaco, 23–25 May 2011
www.cvent.com

ASX ETF Institutional Conference, Sydney, 02 June 2011
www.asx.com.au

The 10th Annual Canada Cup of Investment Management, Toronto,
07–08 June 2011
Complimentary passes are being offered by IMN to attend this event to investment professionals at Pensions, Foundations, Endowments, Hedge Funds, Insurance Companies as well as for Registered Investment Advisors. Please contact Jackie Rubbo at jrubbo@imn.org.
www.imn.org

ETF & Indexing Investments, Madrid, 15–16 June 2011
www.terrapinn.com

The Mondo Visione Exchange Forum, London, 15–16 June 2011
www.mvexchangeforum.com

Africa Investment Summit, Johannesburg, South Africa 20–23 June 2011
www.terrapinn.com

European Cup of ETFs and Investment Management, London,
19–20 September 2011
Complimentary passes are being offered by IMN to attend this event to investment professionals at Pensions, Foundations, Endowments, Hedge Funds, Insurance Companies as well as for Registered Investment Advisors. Please contact Jackie Rubbo at jrubbo@imn.org.
www.imn.org

ETF & Indexing Investments, London, 17–19 October 2011
www.terrapinn.com

Please join ETF Network on Linkedin at www.linkedin.com.

Source: BlackRock, 06.05.2011

Filed under: Banking, News, Services, Wealth Management, , , , , , , , , , , , , , , , , , ,

ETF panorama: Aspectos Destacados del 1er Quartal 2011 BlackRock

La industria global de los ETFs mantiene la trayectoria ascendente con la que inició el año, si se comparan los 2,605 ETFs con activos por USD$1,399.4 millones al cierre del primer trimestre de 2011, con respecto de los 2,131 ETFs con activos por USD$1.082 mil millones en el mismo periodo de 2010.  _ETF  Reporte 1er Quartal 2011

En Latinoamérica el sector de ETFs cuenta con 26 ETFs, 405 listados y activos bajo administración por USD $10.2 mil millones, de ocho proveedores en tres bolsas, que se comparan con 21 ETFs, 231 listados y activos por USD$9.3 mil millones de tres proveedores en tres mercados que había a finales del primer trimestre de 2010.

Como sabes, los ETFs son instrumentos que siguen índices, listados y cotizados en mercados bursátiles, que proporcionan transparencia diaria al portafolio. El reporte da cobertura a los productos Exchange Traded Funds (ETFs) a escala global e incluye rankings de proveedores de ETFs e índices globales, en Estados Unidos, Europa, Japón, Asia, Latinoamérica, Medio Oriente y Africa.

Además, incluye comentarios respecto al impacto en los mercados de inversión global debido a acontecimientos como los disturbios en países de Oriente Medio y norte de Africa, así como desastres naturales como el terremoto y tsunami, y la consecuente catástrofe nuclear en Japón.

Adjunto te hacemos llegar el reporte completo en inglés, en formato PDF. En caso de cualquier duda adicional, quedamos a tu disposición.

Source: BlackRock- Carral Sierra, 06.05.2011

Filed under: Asia, Exchanges, Latin America, Library, News, Services, , , , , , , , , , , , , , , , , , , ,

ETF Landscape: Industry Highlights de February/Febrero 2011 – En/Sp – BlackRock

ETF – 02.2011 Report/Reporte

English

At the end of February 2011, the global ETF industry had 2,557 ETFs with 5,802 listings and assets of US$1,367.4 Bn, from 140 providers on 48 exchanges around the world. This compares to 2,091 ETFs with 3,998 listings and assets of US$1,001.9 Bn from 115 providers on 40  exchanges, at the end of February 2010.

We expect global AUM in ETFs and ETPs1to increase by 20–30% annually over the next three years, taking the global ETF/ETP industry to approximately US$2 trillion in AUM by early 2012. Considering ETFs separately, AUM should reach US$2 trillion globally by the end of 2012, US$1 trillion in the United States in 2011 and US$500 billion inEurope in 2013.

Taking ETFs and ETPs together, United States AUM should reach US$2 trillion in 2013, with European AUM reaching US$500 billion in 2012.

In Latin America, the ETF sector remains with 26 ETFs, 365 listings and assets of USD $10.2 billion of four providers on three Exchanges. Compares 20 ETS, 223 listings and assests of USD$ 9.3 billions and three providers  at three exchanges in february 2010.

Español:

El reporte ETF Landscape: Industry Highlights da a conocer la situación de los Exchange Traded Funds (ETFs) y Exchange Traded Products (ETPs) en el mes de febrero.

Se espera que los activos globales bajo administración de los ETFs y ETPs se incrementen de 20 a 30% anualmente durante los próximos tres años, llegando a aproximadamente USD $2 billones (trillion dollars) a principios de 2012.  A escala global, el sector de ETFs tuvo 2,557 ETFs con 5,802 listados y activos por USD $1,367.4 millones, de 140 proveedores en 48 mercados bursátiles en el mundo a finales de febrero de 2011, comparado con 2,091 ETFs con 3,998 listados y activos por USD $1,001.9 millones de 115 proveedores en 40 mercados a fines del mismo periodo del año pasado.

En Latinoamérica el sector de ETFs permanece con 26 ETFs, 365 listados y activos por USD $10.2 mil millones, de cuatro proveedores en tres bolsas, comparado con 20 ETFs, 223 listados y activos por USD$9.3 mil millones de tres proveedores en tres mercados a fines de febrero de 2010.

Source:BlackRock, March 10, 2011

Filed under: Asia, Australia, Brazil, Chile, China, Exchanges, Hong Kong, India, Indonesia, Japan, Korea, Latin America, Malaysia, Mexico, News, Services, Singapore, , , , , , , , , , ,

The Currency Investor Magazin Autum 2010

The Autumn 2010 edition of Currency Investor magazine is now available. You can view a complimentary digital version at this link:


Currency Investor Autumn 2010

This exciting new quarterly magazine is designed to help global Retail and Institutional investors discover ways to leverage currencies  as a tactical asset class for their risk management and direct investment and trading requirements.

The next edition is planned for publication in Q1 2011.

Source: Currency Investor 23.11.2010

Filed under: Asia, Latin America, News, Services, , , , , , , , ,

ETF: BlackRock ETF Industry Review Latin America Industry Review – Year End 2009

BlackRock has just published its Latin America Industry Review Year End 2009 report. This report is a review of the Exchange Traded Funds (ETFs) and Exchange Traded Products (ETPs) listed globally.

At the end of 2009 the Latin American ETF industry had 17 locally domiciled ETFs, 211 exchange listings, and assets of US$9.84 Bn from three providers on two exchanges.

There are 169 ETFs cross listed in Mexico at the end of December 2009 from eight providers, while there are 340 ETFs registered for sale in Chile from 10 providers, and 277 ETFs registered for sale in Peru from 12 providers.

Read full report of BlackRock_ETF_Latin_America_Review_2009

Source:MondoVisione, 05.03.2010

Filed under: Argentina, BM&FBOVESPA, BMV - Mexico, Brazil, Central America, Chile, Colombia, Exchanges, Latin America, Mexico, News, Peru, Services, , , , , , , , , , , , , , , , , ,

ETF: BlackRock ETF Landscape Industry Review November 2009

BlackRock has just published the November 2009 edition of its monthly ETF Landscape Industry Review. This report is a review of the Exchange Traded Funds (ETFs) and Exchange Traded Products (ETPs) industry through the end of October 2009.

At the end of October 2009 the global ETF industry had 1,859 ETFs with 3,327 listings and assets of US$941.85, from 97 providers on 40 exchanges around the world.

Download report hereBlack Rock ETF Lamdscape November 2009

Source: MondoVisione, 11.12.2009

Filed under: Argentina, Asia, Brazil, China, Hong Kong, India, Indonesia, Japan, Korea, Latin America, Library, Malaysia, Mexico, News, Risk Management, Singapore, Thailand, , , , , , , , , , , , ,

ETF Securities: Commodity ETC Assets Triple Over Past 12 Months To $17bn As Demand For Gold, Energy, Agriculture And Other Hard Assets Surge

  • Record breaking year for commodity ETCs, with assets up over $11bn to $17bn
  • ETCs tracking agriculture and industrial metals show highest buy/sell ratio
  • Physically-backed precious metal holdings – gold, silver, platinum, palladium – reach historic highs
  • ETFS Copper (COPA) up 118% in 2009 to end-November, the best performing ETC, followed by ETFS Physical Palladium (PHPD) up 96% and ETFS Zinc (ZINC) up 81%
  • ETFS Industrial Metals (AIGI) best performing commodity basket in 2009, up 67% YTD
  • ETFS Forward All Commodities DJ-UBSCI-F3SM (FAIG) up 268% over the past 10 years, the top performing major asset class over the period

Commodities bounced back strongly this year following the recent credit crisis, with ETFS Forward All Commodities DJ-UBSCI-F3SM (FAIG) up 20% year-to-date and 268% over the past 10 years based on data to the end of November. ETFS Industrial Metals (AIGI) was the best performing ETC, with YTD growth of 67%. Industrial metals significantly outperformed developed market equities, outperforming the Dow Jones Euro STOXX 50 by 37 percentage points since the start of 2009. Industrial metals have also outperformed bonds, cash and real estate over the same period as the global recovery has become more entrenched and market appetite for plays on the recovery has accelerated. The precious metals sub-sector was the next best performing major sector, with ETFS Physical Silver (PHAG), ETFS Physical Platinum (PHPT) and ETFS Physical Palladium (PHPD) all returning over 60% YTD.

Commodities remain the best performing major asset class over a 10 year horizon, with ETFS Forward All Commodities DJ-UBSCI-F3SM (FAIG) registering cumulative growth of 268%, compared to a 10% rise in the Dow Jones Euro STOXX 50, a 13% rise in the FTSE 100, a 6% rise in property1 and 75% return on bonds2. This outperformance was achieved with lower average annual volatility than equities over the same period (see table below).

Asset Class Returns Compared (YTD, and Past 10 years)

YTD 10 Years Volatility3
ETFS Industrial Metals 67% 178% 23%
ETFS Forward All Commodities DJ-UBSCI-F3SM 20% 268% 15%
FTSE 100 37% 13% 23%
Dow Jones Euro STOXX 50 30% 10% 24%
US Tracker 1-10 Yrs Bond Index 0% 75% 4%
UK EPRA Real Estate Index 21% 6% 25%

Source: Bloomberg
1 Property: proxied by the UK EPRA Real Estate Index
2 Bonds: Proxied by US Tracker 1-10Yrs Bond Index
3 Calculated using the annual volatility of daily returns from 30th November 1999 to 30th November 2009

2009 has been a record breaking year for commodity inflows, with assets under management (AUM) in ETF Securities’ ETCs and ETFs rising over $11 billion to $17 billion over the past 12 months. Physical gold and long natural gas ETCs have seen the largest investment demand YTD, with inflows of $2 billion and $1 billion respectively since the start of 2009.

In terms of investor positioning, agriculture ETCs such as ETFS Agriculture DJ-UBSCISM (AIGA) had the highest buy/sell ratio of any sector in the 11 months ended November with a ratio of 3.2. This is consistent with steady inflows into agriculture ETCs in 42 of the 48 weeks to end-November. Industrial metals had the next strongest buy:sell ratio at 2.7, coinciding with the sharp rise in industrial metal prices in 2009. Although energy ETCs have seen the second largest inflows in 2009 YTD, their buy/sell ratio was one of the lowest at 1.8 as extremely strong oil inflows in the first four months of the year and the surge of inflows into natural gas ETCs since May were partially offset by outflows in May and June from ETCs tracking shorter-dated oil futures returns.

Source: ETF Securities

Industrial metals were the strongest performing sector in 2009, up 67% to the end of November. Gains were led by a 118% rise in ETFS Copper (COPA) and an 81% rise in ETFS Zinc (ZINC). ETFS Aluminium (ALUM) remained the weakest of the industrial metals, but still managed a 24% return in the 11 months ended November. Flows into industrial metals accelerated in 2009, taking industrial metal assets to almost twice their previous peak level seen in H1 2008. Robust Chinese demand, coupled with stronger manufacturing activity in developed economies, has underpinned investor interest in industrial metals.

Top 10 Long and Short ETC Performance

Top 10 Longs YTD (End November 09)
ETFS Lead* (LEED) 125.8%
ETFS Copper (COPA) 118.3%
ETFS Physical Palladium (PHPD) 95.9%
ETFS Zinc (ZINC) 80.8%
ETFS Gasoline (UGAS)
ETFS Physical Silver (PHAG)
ETFS Industrial Metals DJ-UBSCISM (AIGI)
ETFS Silver (SLVR)
ETFS Physical Platinum (PHPT)
ETFS Sugar (SUGA)
74.4%
68.1%
67.3%
62.4%
60.6%
56.5%
Top 10 Shorts YTD (End November 09)
ETFS Short Natural Gas (SNGA) 69.1%
ETFS Short Lean Hogs (SLHO) 16.1%
ETFS Short Livestock DJ-UBSCISM (SLST) 14.5%
ETFS Short Live Cattle (SLCT) 9.3%
ETFS Short Wheat (SWEA)
ETFS Short Corn (SCOR)
ETFS Short Energy DJ-UBSCISM (SNRG)
ETFS Short Grains DJ-UBSCISM (SGRA)
ETFS Short Agriculture DJ-UBSCISM (SAGR)
ETFS Short All Commodities DJ-UBSCISM (SALL)
8.6%
-2.7%
-6.9%
-9.7%
-16.3%
-19.3%

Source: ETF Securities

* ETFS Lead saw 126% growth based on simulated returns based on the underlying DJ-UBS Lead Sub-IndexSM. This product was listed in November 2009.

Within precious metals, the best performing commodities were metals tied to the industrial cycle, with ETFS Physical Palladium (PHPD) up 96%, ETFS Physical Silver (PHAG) up 68% and ETFS Physical Platinum (PHPT) up 61%. Gold prices reached fresh historic highs in 2009, breaching the $1200/oz mark by the start of December. Interest in physical gold holdings was extremely strong, up 1.9 million ounces (31 %) in the 11 months to the end of November. This marks the second year of rapid growth in physical gold holdings, which have more than doubled (up 4.2 million ounces, or $5 billion at current gold prices) since the start of 2008. Total assets in ETF Securities’ physically-backed gold ETCs stood at $9.5 billion by the end of November 2009, making them the largest ETF/ETC holdings in Europe and the second largest ETC/ETF holding in the world. Other physical precious metal ETC holdings also posted new historic highs in 2009, with physically-backed silver, platinum and palladium ETCs seeing their metal holdings (in ounces) reach the highest levels since inception by the end of November.

The energy sector saw mixed performance over 2009, with a 74% rise in ETFS Gasoline (UGAS) and a 44% gain in ETFS Brent 1mth (OILB) offset by a 57% drop in ETFS Natural Gas (NGAS). In H1 2009 sharp falls in oil prices attracted almost $1 billion of inflows into long oil ETCs between January and May. There was some profit taking on these positions subsequently, coinciding with $1.4 billion in inflows into long natural gas ETCs. These flows suggest some rotation in investor positioning within the sector as natural gas prices have underperformed their oil counterparts.

Agriculture saw a sharp divergence in returns with ETFS Softs (AIGS) up 34% in the 11 months to the end of November, compared to a 1% gain in ETFS Grains (AIGG). ETFS Softs were boosted by a 57% rise in ETFS Sugar (SUGA) and a 29% rise in ETFS Cotton (COTN). ETFS Soybeans (SOYB) was up 25% while ETFS Wheat (WEAT) was down 20% and ETFS Corn (CORN) was down 9%. Agriculture saw the most consistent and third largest inflows (behind energy and precious metals in 2009 totalling over $1 billion YTD. Historically low levels of inventories, together with a number of weather-related crop disruptions this season, have helped underpin investment demand in agriculture in 2009.

Nicholas Brooks, Head of Research and Investment Strategy, commenting on the 2009 performance numbers said: “Demand for commodity ETCs has been incredibly strong in 2009. ETF Securities assets under management nearly tripled to $17bn over the past 12 months on the back of strong and steady demand for gold and other physically-backed precious metal ETCs as well as energy, agriculture and industrial metal ETCs. Assets under management are now over 70% higher than they were in July 2008 before the financial crisis broke out. Most of the demand has been for long exposure, with investors’ building their holdings of “hard assets” both for their potential price-supportive long-term supply-demand fundamentals, as well as their potential to hedge against inflation and currency debasement risks as government finances deteriorate and central banks keep the liquidity taps open.

Source: MondoVisione, 09.12.2009

Filed under: Library, News, Risk Management, , , , , , , , , , , , , ,

10 Common Myths About ETF Investing

Boasting competitive cost structures, enhanced tax efficiencies, and improved liquidity features, ETFs have quickly become one of the most popular tools for all types of investors. But despite the rapid rise of the industry over the last five years, there are still countless investors, including many financial advisors, who are completely unaware of exchange-traded funds. Even among those who are relatively well educated on the basics of ETFs, confusion on the nuances of these products can run rampant.

While the benefits and functions of ETFs are relatively simple to grasp, there are some complexities that have created confusion about these products. Below are a look at ten of the most common myths about ETF investing, along with some simple (and not-so-simple) truths.

Myth #1: ETFs Eliminate Investor Tax Liabilities

When touting the benefits of exchange-traded products, most investors lead with the reduced cost structure and enhanced tax efficiency relative to actively-managed mutual funds. While the lower costs associated with ETFs is relatively easy to explain and understand, the tax advantages are a little more difficult to grasp. Many investors mistakenly believe that ETFs are taxable at a lower rate than stocks or mutual funds, or that ETFs are exempt from taxes altogether.

The tax efficiencies of ETFs are primarily related to the creation/redemption process: because investors trade with each other, managers don’t have to sell off assets whenever investors want to cash out. Moreover, savvy managers can use the in-kind redemption process to slough off shares that have the biggest unrealized gains, thereby limiting taxes that will ultimately be paid.

But ETFs are not immune to capital gains distributions for example – they may make them if the underlying benchmark changes or one company in the index acquires another. And gains incurred on ETFs will, under most circumstances, still be taxable to individual investors. The tax benefits of ETFs are very real, and can have a material impact on bottom-line portfolio performance. But ETFs aren’t a magic cure-all that will keep the tax man at bay indefinitely.

Myth #2: ETFs Are Primarily Used By Long-Term, Buy-And-Holders

Due to their ultra-low expense ratios, ETFs would seem to be the ideal tool for long-term buy-and-hold investors looking to enjoy the benefits of compounding returns while avoiding what Jack Bogle calls the “tyranny of compounded costs.”

So investors may be shocked to see the turnover numbers exhibited by some of the funds that are generally found among the “core” holdings in many investor portfolios. As shown in the table below, many broad market and sector-specific ETFs exhibit daily trading volumes that imply a turnover period measured in weeks, not years. The Energy Select Sector SPDR (XLE), for example, has a daily volume equal to about 20% of total shares outstanding, indicating that the fund turns over every 5 trading days.

ETF Avg. Volume Shares Outstanding Daily Turnover
iShares S&P 500 Index Fund (IVV) 4.2 million 192.8 million 2.2%
iShares Emerging Markets Index Fund (EEM) 85.9 million 902.7 million 9.5%
SPDR Gold Trust (GLD) 17.7 million 350.0 million 5.1%
PowerShares QQQ Trust (QQQQ) 99.7 million 399.6 million 24.9%
Energy Select Sector SPDR (XLE) 21.5 million 106.9 million 20.1%

So it is clear that a significant amount of the money in ETFs is not in low-activity retirement accounts, but rather in the hands of more active traders. This shouldn’t be all that surprising considering the depth of exposure offered by ETFs. After all, the wrong stock in the right sector still yields a negative result. ETFs offer a way for active traders to place bets on trends they see developing without taking on significant company-specific risk (indicating that perhaps ETFs are competing more with individual stocks than they are with mutual funds).

Myth #3 ETFs Are For Short-Term Investors Only

Those who interpret daily trading volume reports as an indication that short-term traders have embraced exchange-traded funds may swing to the opposite end of the spectrum, believing that perhaps ETFs should be avoided by investors with a long-term focus. If sophisticated, high-volume traders are the primary users of ETFs, some liken investing in these funds to being thrown into the shark tank – along with the sharks.

Lamenting that ETFs have become so popular among day-traders, legendary investors and industry pioneer Jack Bogle has expressed that the ETF is a truly great business model that has been transformed into a flawed investment model. His point is that ETFs were designed for buy-and-holders and have the potential to perform very well when used to achieve long-term investment goals.

Don’t be scared off by the notion of going up against sophisticated day traders in the ETF market. The creation / redemption process ensures that prices won’t deviate too significantly from NAV and the long term benefits of using ETFs are very real…which leads us to the next myth:

Myth #4: For Most Investors, ETF Savings Don’t Add Up

It’s often said that football is a game of inches. Well, investing is a game of basis points, and for those investors who are in it for the long haul (i.e., anyone with a retirement portfolio) a few basis points here and there can make a big difference. Our All-ETF Model Portfolios ETFdb Pro Members Only include several strategies that offer weighted-average expense ratios of 20 basis points or lower. (Read more here).

Over an extended period of time (say 30 years), the bottom line impact of paying 20 basis points per year (again, we have developed several portfolios that come in at or below this level) as opposed to 100 basis points (a conservative estimate for actively-managed mutual funds) can be material. The following table shows the hypothetical growth of an initial $1 million investment under these two scenarios.

Growth of $1 Million Over 30 Years @ Annual Return Of:
Portfolio Expense Ratio 5% 10% 15%
All-ETF Portfolio 0.20% $4,081,676 $16,522,289 $62,842,961
Actively-Managed Mutual Fund Portfolio 1.00% $3,243,398 $13,267,678 $50,950,159

The impact over a single year may be negligible, but when compounded over a longer horizon, the savings generated by ETFs definitely add up.

Myth #5: Investors Should Always Avoid Leveraged ETFs

Five Leveraged ETF Myths
Don’t Perform As They Claim They Will
Are Too Complex For Most Investors To Understand
Always Erode Returns When Held For Multiple Days
Target Retail Investors
Misuse By Uninformed Investors Is Rampant

Much of the media coverage on the ETF industry has been flattering – reduced fees and enhanced liquidity are an easy story to sell – but there have been some rather harsh criticisms as well. Most of the negative publicity has focused (rather unfairly) on leveraged ETFs, products that are designed to deliver amplified daily returns (both positive and negative) on various benchmarks.

Leveraged ETFs generally do a very good job of accomplishing their stated objectives (leveraged daily returns), but have been dragged through the mud because they don’t deliver the returns that some expect of them (point-to-point leveraged returns). A unique consequence of the recent financial crisis also led many investors to incorrectly conclude that leveraged ETFs are flawed products. Because of the extreme volatility exhibited by equity markets in 2008, many funds that compound returns daily saw significant return erosion when held for extended periods of time. But volatility has since subsided, and many investors have learned that the compounding effects of leveraged ETFs can (and often do) work for them.

Make no mistake: leveraged ETFs aren’t for everyone. Double and triple leverage is too much risk for most investors. But for those with an appetite for risk, these funds can be extremely powerful tools that can serve a number of purposes, including amplifying returns (as well as losses) and establishing hedges.

For more on the misconceptions about leveraged ETFs, see this feature.

Myth #6: Commodity ETFs Track Spot Prices

Perhaps more than any other asset class, interest in commodities has surged with the rise of the ETF industry. Once reserved for large institutions, commodities have now become a popular asset class among all levels of investors, with dozens of exchange-traded products offering exposure to everything from crude oil to aluminum to livestock.

Some investors mistakenly believe that the performance of commodity ETPs will move in lock step with spot prices of that natural resource. While some funds (such as GLD) actually hold the underlying, the physical properties of most commodities makes physical storage by these funds impractical (natural gas is a good example).

So most commodity funds invest not in physical commodities, but in exchange-traded futures contracts based on the underlying commodity. In order to avoid taking physical delivery, these funds will generally “roll” the futures contracts as they approach expiration, selling near month contracts and buying second month contracts. While a futures-based strategy will generally deliver returns that are correlated with spot prices, the performance in certain environments can deviate significantly (see this article for a more in-depth explanation).

The United States Oil Fund (USO), which invests in crude oil futures is a good example of the issues potentially facing investors. As crude oil prices have jumped this year, a futures-based investment strategy has lagged behind the hypothetical return on spot prices.

USO Spot

The fact that commodity funds don’t invest directly in commodities doesn’t make them flawed products and certainly doesn’t mean that they should be avoided. But investors should understand exactly what they’re getting into (a futures-based strategy) and what they aren’t (direct exposure to spot commodity prices).

Myth #7: ETFs Precisely Replicate Underlying Indexes

ETFs have become popular among investors frustrating with paying active managers to attempt to beat a benchmark when they can simply “own the benchmark” at a significantly reduced rate. Many of the exchange-traded products available to U.S. investors engage in a full replication strategy, holding each security composing the underlying index in the same (or very similar) percentages as the benchmark. The S&P 500 SPDR (SPY), for example, holds 500 stocks, each component of the S&P 500.

But there are also several ETFs that don’t “own the benchmark,” including many that don’t even come close. Many of the most popular indexes weren’t designed with the thought of exact replication by investors in mind. ETFs that offer significant depth of exposure (i.e., are composed of thousands of individual securities) may be difficult and expensive for ETF managers to replicate exactly. So these funds use a “sampling” strategy instead, attempting to construct a basket of securities that will match key metrics of the entire index without holding every single stock or bond.

ETF Index ETF Holdings Index Holdings % Held By ETF
Emerging Markets Index Fund (EEM) MSCI Emerging Markets Index 407 751 54%
Barclays Aggregate Bond Fund (AGG) Barclays Capital U.S. Aggregate Bond Index 267 8,492 3%
MSCI ACWI ex-U.S. ETF (CWI) MSCI ACWI ex USA Index 610 1,812 34%

While these replication strategies are generally quite effective, on occasion performance gaps between ETFs and their related indexes can arise. Investors looking to avoid this can look towards more “ETF-friendly” benchmarks that have fewer holdings.

Myth #8: The Liquidity Features of ETFs Make Limit Orders Unnecessary

One of the appealing features of ETFs compared to actively-managed mutual funds is the intraday liquidity, allowing these products to trade like stocks on major exchanges whenever markets are open. Moreover, the presence of Authorized Participants in the creation/redemption process offers up another source of liquidity. But this doesn’t mean that ETF investors are assured of a continuous market for every fund. In fact, there are dozens of ETFs with daily volumes of less than 10,000 shares that may present liquidity problems, especially for those looking to execute large trades.

Even among the largest ETFs, investors may run into liquidity issues. The Vanguard Dividend Appreciation ETF (VIG), for example, has a market capitalization of almost $1.7 billion but average daily volume of about 275,000 shares. We’ve heard far too many stories of investors placing a relatively small market order only to see it filled at a wide range of prices, many of which are considerably higher than the indicated bid. When the bid comes down shortly after completion of the transaction, investors find themselves in an immediate hole.

Limit orders are an extremely powerful tool, and should be used in almost every ETF trading situation.

Myth #9: ETFs Will Soon Replace Mutual Funds

I always get a kick out of studies predicting the date at which ETF assets will top mutual funds. The honest truth (coming from someone who eats, drinks, and sleeps ETFs) is that ETFs will never knock mutual funds from their perch atop the investment universe. You and I both know that ETFs are the future, and that the market will continue to expand as more and more investors embrace indexing strategies generally and exchange-traded products specifically. But it’s not going to happen overnight.

The obstacles facing ETFs are both numerous and daunting. Breaking into 401(k) plans seems like a foregone conclusion to many ETF advocates, but the associated challenges will ensure that if this does happen, it will be a very slow process.

There’s another part to this equation: while an increasing number of investors have shunned active management, this strategy will always have its advocates. And for good reason – there are, after all, some fund managers who consistently beat their benchmark and justify the incremental costs to their investors.

The final factor to consider relates to myth #2 on our list. ETFs are used perhaps more frequently as a substitute for individual stocks than as a replacement for mutual funds. The target markets for these products may not have as much overlap as many would imagine. ETFs will continue to gain in popularity and asset size, but mutual funds will be the dominant player in the investment industry for some time to come.

Myth #10: Active Management And ETFs Are Incompatible

Sampling Of “Intelligent” ETFs
Ticker Related Index
PIZ Dorsey Wright Developed Markets Technical Leaders Index
PIQ Top 200 Dynamic Intellidex Index
PWC Dynamic Market Intellidex Index
RYJ Raymond James SB-1 Equity Index

Many analysts have pointed to the rise of the ETF industry as evidence that active management has been given a death sentence. While many of the first ETFs (and many of the most popular ETFs) are related to traditional cap-weighted benchmarks, there are dozens of ETFs that blur the line between active and passive management, tracking “intelligent” benchmarks that attempt to employ quantitative analysis to select components poised for outperformance.

The ETF is a great delivery vehicle that wasn’t being fully utilized by the first generation of exchange-traded funds,

says Ed McRedmond Senior Vice President of Portfolio Strategies at Invesco PowerShares.

For those investors who believe in active management, why wouldn’t they want it delivered through an efficient investment vehicle?

But the applications of active management go far beyond actively-managed ETFs. A number of academic studies have shown that the bulk of investor returns are attributable to asset class selection, a task not attempted by most exchange-traded products. ETFs are becoming a popular tool for active managers who seek to generate alpha not through individual stock selection, but through tilting portfolios towards and away from various asset classes, sectors, and maturities depending on macroeconomic trends and conditions.

Source: Seeking Alpha, 26.11.2009

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Tokyo Stock Exchange lists Indian ETF – S&P CNX Nifty linked ETF

Today, the Tokyo Stock Exchange approved the listing of the “NEXT FUNDS S&P CNX Nifty Linked Exchange Traded Fund” managed by Nomura Asset Management Co., Ltd.. The ETF is planned to be listed on Thursday, November 26, 2009.

This is the first ETF linked to Indian stocks to be listed on markets in Japan. The “S&P CNX Nifty Index” to which the ETF is linked is comprised of the 50 premier issues of the National Stock Exchange of India.

Code 1678 (ISIN JP3047100007)
Name NEXT FUNDS S&P CNX Nifty Linked Exchange Traded Fund
Fund Administrator Nomura Asset Management
Listing Date November 26, 2009
Trading Unit 100 units
Underlying Index S&P CNX Nifty Index

TSE entered into a memorandum of understanding with the National Stock Exchange of India on October 15, 2006. Through this ETF, TSE hopes to supply investors with better access to the Indian securities market and contribute to the development of the markets in both of our countries.

With this listing there will be a total of 69 ETFs listed on the Tokyo market, bringing us closer to the goal of 100 listed ETFs by fiscal year 2010, as laid out in the Medium-Term Management Plan. TSE will continue working to diversify the ETF market and improve the convenience of our market for all investors.

Additional ETF’s listed in Tokyo include Brazil’s IBOVESPA, China A Share CSI300 as well as  ETC (Exchange Trade Commodities) like Gold, Silver, Platinum and Palladium. See also TSE lists Brazilian ETF.

Tokyo Stock Exchange officel ETF site
ETFs on TSE November 2009 (.doc and .cvs)

Source: Tokyo Stock Exchange 06.11.2009

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ETF Securities to launch exchange-traded currency platform

ETF Securities (ETFS), the global pioneer in Exchange Traded Commodities (Commodity ETCs) and 3rd generation Exchange Traded Funds (ETFs) is planning to launch the world’s largest and Europe’s first Exchange Traded Currency (Currency ETCs) platform with trading expected to begin next week. Currencies are the most liquid asset class with over $3.2 trillion of trading each day yet it is one of the last asset classes to be packaged in the form of an exchange traded product. ETF Securities is a pioneer of ETCs having launched the world’s first Commodity ETC platform in Europe between 2003 and 2006 and which now has accumulated over $15 billion in assets and recent trading of approximately $1.4 billion per week.

Initially, 18 Currency ETCs will be listed on the London Stock Exchange (LSE) which will track recently launched MSFX Currency IndicesSM. The initial Currency ETCs provide long or short passive exposure to G10 currencies versus the US Dollar and include AUD, CAD, CHF, EUR, GBP, NOK, NZK, SEK and YEN. The ETCs also provide exposure to local interest rates in addition to FX movements between the relevant Currency and US Dollars. The new Currency ETCs will be fully collateralised in order to mitigate counter-party risk and will be listed in the ETC segment of the LSE.

Currency ETCs are intended for investors wishing to diversify their portfolio through the addition of a new asset class which has a low correlation with equities and bonds, or for those investors wanting to take advantage of tactical or strategic macro opportunities using the foreign exchange market. The table below shows that the returns of most major market currencies versus the US Dollar outperformed equities, bonds and real estate with lower volatility. For example, the MSFX Long AUD Index outperformed UK equities by 13.4, 55.4 and 37.2 percentage points over one, three and five years respectively with approximately 5% per annum of the total return over the five year period due to local Australian interest rates which have been incorporated into the MSFX Currency Index.

ETF Securities are launching the Currency ETC platform due to investor demand for secure, transparent and liquid exchange traded products. With Commodity ETC assets having nearly tripled in 2009 and volumes having doubled, it is clear that investors have widely accepted the ETC structure as a vehicle of choice for exposure to commodities. This is now been extended to include currencies.

Similar to Exchange Traded Funds (ETFs), ETCs are liquid, accessible and simple. ETCs can be created and redeemed on a continuous basis by market makers, matching the tremendous liquidity of the underlying foreign exchange markets and can be tnd can be traded by investors on a regulated exchange in the same way as any equity. Currency ETCs will provide accurate and transparent currency exposure to recognised benchmarks in a single trade. In addition, Currency ETCs require no foreign currency account and no trading or management of futures/forward contracts as ETCs are simply priced off new currency indices published by Morgan Stanley.

The Currency ETCs will track newly launched Morgan Stanley Foreign Exchange Indices (MSFXSM Indices) and are designed to replicate a fully collateralised long or short investment in one of the G10 currencies against the USD and also provide exposure to local interest rates. The indices follow an objective and systematic methodology overseen by an index committee and are based off publicly available data sources that reflect actual quotes / trades by market participants.

Investors will be able to buy and sell the new ETCs on the London Stock Exchange, through regulated brokers or ETF Securities’ network of approved market makers and authorised participants. Currency ETCs will be traded with all the same order types available to equities, including market, limit and stop orders. The minimum trade size is one security, settlement is T+3 (trade date plus three business days) in CREST and each Currency ETC be subject to a 0.39% p.a. management charge.

Nik Bienkowski, Chief Operating Officer, commenting on this innovative launch said:

“Our investors have demanded access to new asset classes in a liquid and secure package. Currency ETCs will deliver this through an open-ended exchange traded security which is fully collateralised and available through ordinary brokerage accounts. After the events of the past year, transparency and security have been demanded by our investors and as a result of the ETC structure, assets in our Commodity ETC platform have increased by over $9 billion this year to reach $15 billion with recent weekly trading volumes of $1.4 billion.”

“ETF Securities’ Currency ETC platform provides 18 long and short Collateralised Currency Securities with exposure to G-10 currencies. Currencies have been one of the best performing asset classes, along with commodities, over the past 1 year, 3 years and 5 years. Currencies also have low correlation to other asset classes and low volatility, making currencies an asset which can improve portfolio performance through increased diversification. Currencies are the most liquid class available while Currency ETCs also provide access to local interest rates, which have averaged around 5% per annum over the past five years in the case of the Australian Dollar.”

Source: ETF Securities, 04.11.2009

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